USA > California > San Francisco County > San Francisco > A history of the city of San Francisco; and incidentally of the state of California > Part 14
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25 | Part 26 | Part 27 | Part 28 | Part 29 | Part 30 | Part 31
Meeting every day with the people owning land at North Beach, listening to their predictions of the ad- vance of their part of the city, he adopted their ideas, became more sanguine than any of them, and satisfied himself that by speculation in lots there he could make millions. It was less than a mile from the business center of the city; it was nearer the Golden Gate; it had a larger area of level land; it had a water front where ships could anchor securely, though the winds and waves were higher than in Yerba Buena cove; it might be reached on a level road by a cut round the base of Telegraph Hill, and by Stockton street, over an elevation that did not exceed eighty-five feet in height; the titles of land were better than at any place south of California street, and the prices not one quarter of those
219
THE GOLDEN ERA IN DECLINE.
in the district south of Pacific and east of Stockton. The city must grow, and every circumstance indicated in Meiggs' opinion, that, by proper management, a large part of its most valuable growth might be turned to North Beach. The more he thought of it, the clearer it became to him. Millions had been made by the owners of water lots in Yerba Buena cove, and he imagined that he could make as much out of the lots in North Beach. They could be had cheap, so he bought extensively, per- suaded his friends to buy, built Meiggs' wharf two thou- sand feet long, and filled in some lots.
Having done more than anybody else for the improve- ment of the northern end of the city, he became so popu- lar in that neighborhood that there was a general demand that he should represent it in the city council, and he took the place. The cemetery in the block bounded by Powell, Stockton, Lombard and Chestnut streets, was regarded as a drawback to the growth of that part of the city, and he obtained the passage of ordinances to close it, and to remove the bones of those who had been buried there to the new cemetery to be opened on the block now occupied by the new city hall. He graded part of Stockton street, and under his influence contracts were let for grading Powell street from Clay to North Beach, Francisco street through the northern end of Telegraph Hill, and several other streets along the north- ern and eastern sides of the hill, thus facilitating access to North Beach from the business centre of the city.
SEC. 106. Forged Warrants. But these improvements, the taxes and the street assessments, demanded more
220
HISTORY OF SAN FRANCISCO.
money than he could spare from his business. He had expected that his lots would now advance considerably in value, so that he could sell a few at a high profit, and obtain the means for going on with his plans; but the people could not be made to believe in North Beach, and besides, just at the time when he expected to sell- that is, in the spring of 1854-there was a serious de- eline of real estate throughout the city. He was a bankrupt; but that fact was his own secret, and he under- took to save himself by forgery, going into the business extensively. The city was then doing business on trust, giving to her creditors warrants or municipal promissory notes, without interest, attested by the signatures of the mayor and controller. Those officials were engaged in private business, and did not guard the blank warrants with proper care. Meiggs, as an alderman and business man of high position, was a frequent visitor in their offices. He was attorney in fact for a contractor, who was entitled to a large number of warrants for street work, and while getting them, could see where and how the blank warrants were kept. The blanks were sup- plied to the controller in book form, and it is supposed that, for the convenience of the officials, the controller signed a lot of blanks in advance, then the mayor signed also, and the paper was ready to be filled with the amount, name of creditor, date and number, torn out and given to the creditor. This was not less careless than convenient.
The city warrants were considered good security for one half their nominal value. Many of them were used
221
THE GOLDEN ERA IN DECLINE.
by Meiggs as security for borrowed money. He was constitutionally a borrower. From the time when he undertook his North Beach speculation, he was never out of debt; he was nearly always pushed. "Shinning round " for money was a large part of his regular busi- ness. He said, in a joke, that it seemed an unnatural situation to him if he left his dwelling in the morning without having to hunt up a loan of forty thousand dol- lars in the course of the day. He found that nothing was accepted as security by the borrowers generally with less objection, delay and suspicion than city war- rants; nor when he came to examine the circumstances, could he find any other fraudulent paper which he could obtain or use with so little danger to himself.
There is reason to believe (for the facts were never judicially or officially investigated) that Meiggs took a book of blank warrants already signed by the mayor and controller, and filled them up with the name, sum, date and number, in some cases copying the warrants which he had previously received, so that it would be a difficult matter for the officials to distinguish between the original and the duplicate. As no interest was to be paid on them, and there were no funds with which to redeem them, and no suspicions had been excited as to their gen- uineness, the holders did not take them to the controller's office for examination. Thus month after month went by without the discovery of the forgery, and meantime Meiggs was getting deeper and deeper into difficulty. To prevent detection it was necessary for him to pay interest punctually every month. Many of the lenders discov-
222
HISTORY OF SAN FRANCISCO.
ered that he was ready to pay more than the market rate and they exacted from three to ten per cent. a month, and some of them, it is said, even took one per cent. a day. His burden rapidly accumulated until his debts reached eight hundred thousand dollars; that was the figure fixed by common rumor, and, if correct, he prob- ably had to pay not less than thirty thousand dollars monthly of interest. So long as he paid this, his cred- itors generally were satisfied to let the debt stand, and each might imagine that he was the only one to whom Meiggs was paying heavy tribute.
SEC. 107. Other Frauds. The forged warrants were not the only fraudulent resource of Meiggs. He used a number of forged promissory notes, and it is supposed that as he was not a skillful penman, the signatures, which were very well done, were executed by a clerk in his service. It is possible that some signatures repudi- ated as forgeries after Meiggs' flight, would never have been questioned if he had remained to defend himself. By his course he placed himself at the mercy of some who were worse morally than he was; but never having been publicly exposed, they could safely charge him with offences which he had never committed, and by this in- justice to him they avoided the payment of honest debts. Among the forged notes used by Meiggs was one for fif- teen thousand dollars, purporting to be drawn by Thomp- son & Co. A member of the firm discovered the fraud, but consented, under the influence of Meiggs' pleading, to conceal it, told the holder of the note that it was all right, and afterwards was compelled to pay it. Meiggs
223
THE GOLDEN ERA IN DECLINE.
made a fraudulent overissue of stock of the lumber com- pany of which he was president to the amount of three hundred thousand dollars, and upon this he obtained seventy-five thousand dollars; so said rumor, accepted at the time, but never proved to be true.
SEC. 108. Meiggs' Flight. At last, in September, 1854, it became evident to Meiggs that detection could not be avoided much longer. His only chance to escape bank- ruptcy and the consequent exposure of his frauds was based upon the hope that real estate at North Beach would come into demand; but many circumstances indi- cated that business would continue to grow worse rather better. Besides, the manner of people towards him be- gan to change; his continuous solicitations for money, his payment of high rates, and the multitude of his loans became a subject of conversation and suspicion among the brokers and bankers. They foresaw his failure. Re- mark was made about his relation to street contracts, in some of which it was supposed that he had an improper interest. It was time for him to leave San Francisco.
He bought or chartered the brig " American," of sev- eral hundred tons, supplied it with a good lot of provis- ions and fine stores, including canned meats and wines, told his friends that he was going out to sail on the bay, took his family and brother along, and on the sixth of October sailed out through the Golden Gate and disap- peared from the horizon of California. It was reported on the same day that he had failed for eight hundred thousand dollars, and when it was announced the next day that he had fled there was a terrific excitement.
224
HISTORY OF SAN FRANCISCO.
The holders of the Meiggs warrants rushed to the City Hall, and there many learned that they had nothing save worthless paper as security. They numbered hundreds, and belonged to all classes, including bankers, merchants, city officials, mechanics, draymen and public women. He had taken advantage of the people to whom he fur- nished employment, and even his laundress was not spared. The city treasurer was a victim to the extent of twenty thousand dollars.
His brother, John G. Meiggs, who went with him, had been elected city controller a month before, but had not yet entered upon the duties of his office. His nomina- tion was secured by Henry's influence, who perhaps hoped to have an opportunity of managing the forged warrants, so that their character would never become known to the public. There was no reason to suppose that John knew anything of the forgeries.
As there was no opportunity for trying him, the char- acter and extent of his crimes were never established judicially. Many of those robbed by him considered it better for their credit to say nothing of the loss, save to their intimate friends. It was reported in the news- papers, at the time, that the nominal value of his forged paper-warrants, stocks and notes, amounted to two million dollars, and that he carried away five hundred thousand dollars with him; but afterwards the former figure was reduced to seven hundred and fifty thousand dollars, the latter to two hundred and fifty thousand dollars.
The bark " American" touched at Tahiti, and went thence to Chile, where soon after his arrival he found
225
THE GOLDEN ERA IN DECLINE.
employment as an overseer of a small gang of men. His story had followed him, and people generally regarded him at first with suspicion and dislike; but the railroad contractors found that he was useful, and gave him a chance to exercise his talents. The work was very difficult, and the country poor in men competent to take charge of a large number of laborers in an enter- prise of this kind. It was new to Meiggs, but he had high capacities, and was soon able to surpass all his rivals. He became a contractor, succeeded, and built the most difficult parts of the road between Valparaiso and Santiago. He said afterwards that he landed in Chile with only eight thousand two hundred dollars, and that he was at one time so poor that he was com- pelled to pawn his watch. Whether this was true or not, it is certain that in a short time he was recognized as a wealthy man, able to take contracts which required the advance of large sums of money. After he became well known, it was universally admitted that his arrival in Chile had been a great benefit to the country. The government, bankers, engineers, sub-contractors and laborers agreed in praising him.
His fame filled South America. When Peru under- took the construction of her system of railroads, he was invited to become the principal contractor, and he accepted the invitation. The possession of capital, ex- perience and confidence gave him political influence, and he became one of the leading men of Lima. He built eight hundred miles of railroad, including some of the most difficult work of the kind in the world, and re- 15
226
HISTORY OF SAN FRANCISCO.
ceived' on his contracts more than one hundred million dollars in Peru. As in California, before his departure, and in Chile, he succeeded in gaining general esteem.
For years he was anxious to return to San Francisco. By agents he bought up nearly all his notes, though paying in many cases only a small percentage of the principal originally loaned to him. In 1873, his friends applied to the legislature of California for the passage of a bill to exempt him from trial for his crimes, in case he should return. Both houses passed the bill, but the governor vetoed it, and that was the end of it. If signed, it would have been void; for the constitution does not con- fer the pardoning power upon the legislature. So Mr. Meiggs stayed in Peru, where he died in 1877, and was followed to the grave by the lamentations of the whole people, who admired him not less for his amiable char- acter and charitable deeds among them than for his signal services to the country in the construction of its railroads.
SEC. 109. 1855. As compared with 1854, which had been a year of panic in real estate and great loss in mercantile business for San Francisco, 1855 showed a decrease of six million dollars in the gold shipment, and of eighteen thousand in the number of immigrants arriv- ing by sea. In February Page, Bacon & Co.'s bank, which had bought twenty million dollars' worth of gold dust in the previous year, and was the leading financial establishment of the state, failed in consequence of the embarrassments of its parent house in St. Louis. This disaster was followed by the failure of Adams & Co., the
-
ยท 227
THE GOLDEN ERA IN DECLINE.
chief express company of California, and of many other banking houses, most of which never resumed. Adams & Co., who had built up the express traffic, and had a much larger business (counting transportation, banking, and the number of their servants together) than any other house in the state, disappeared forever, and Wells, Fargo & Co., the rival establishment, succeeded to the place. An excitement about the Kern river mines agitated the whole state, disturbed business in San Fran- cisco during February, and then suddenly died out when the truth became known. Broderick obtained control of the democratic state convention and secured the renom- ination of Bigler, whereupon the chivalry leaders joined the new secret political society of the know-nothings, who obtained control of the state and city administrations, the Whig party having disappeared. The duty of the legislature to elect a federal senator this year was not performed, the members being unable to agree in a choice. The floating debt of the city was funded, three hundred and twenty-two thousand dollars in bonds being issued for two million fifty-nine thousand dollars in city war- rants, most of which were repudiated, while others were acknowledged to be worth about one third of the sums which the city had solemnly promised to pay. This was an act of repudiation, the only one in the history of the city, but was so represented to the people that they did not fully appreciate the dishonesty of refusing to pay the explicit obligations incurred by the officials.
SEC. 110. Adams & Co. In 1849, the house of Adams & Co., expressmen, of Boston, sent D. H. Haskell
228
HISTORY OF SAN FRANCISCO.
as resident partner to found a branch house in San Fran- cisco, where he arrived on the thirty-first October; and in a few weeks Adams & Co. made larger shipments of gold to New York than any other house. The business increased rapidly, and a banking department was added to the express, at the urgent solicitation of merchants. At first Adams & Co. did not extend their routes beyond Sacramento and Stockton, connecting at the former city with Freeman & Co.'s express, which had routes thence to the "northern mines," as they were then called, and at the latter city with Newell & Co., which had offices in the camps of the southern mines. Subsequently the firms of Freeman and Newell were bought out, and Adams & Co. had their offices and agents in all the towns of any note in California. They were, in 1853, unquestionably the leading business house of the state, dealing with more people, furnishing more accommoda- tion to commerce and industry, handling more money, and probably making more profit than any other estab- blishment. They undertook a careful system of assays to ascertain the value of the gold dust from different camps -ranging from fourteen dollars and fifty cents in parts of Mariposa county to nineteen dollars and fifty cents on the Lower Yuba-and they paid the miners the value, less a moderate discount. Wherever they opened an agency, the price of gold dust rose. By Adams & Co. the miners sent money to their families in the eastern states-pro- bably aggregating five hundred thousand dollars month- ly-and also obtained their letters, which were often addressed to San Francisco, and were there hunted out
229
THE GOLDEN ERA IN DECLINE.
by the express for their customers, scattered through the Sierra Nevada. They used their influence efficiently to introduce the private gold coin-five, ten and twenty dollar pieces-struck by J. G. Kellogg and Wass, Molitor & Co. This money, though not authorized by law, con- tained as much gold as the government mintage of the same respective figures, and, in the scarcity of the other coins, was a great convenience to the public. Some of the bankers, expecting their profits in exchange and gold dust to be diminished by the general acceptance of the private coin, tried to excite prejudice against it, but were defeated partly by the influence of Adams & Co.
In May, 1854, the eastern branch of Adams & Co. was merged into a joint stock company, and the Califor- nian branch was reorganized, with D. H. Haskell and I. C. Woods as general partners and Alvin Adams as a special partner, the business remaining under the same style and management, and continuing to extend and gain favor. The profits of the express department were about fifty thousand dollars a month, and the house had a capital of two million dollars. A New York bank which had promised to assist Page, Bacon & Co., of St. Louis, in building and raising the money for a railroad from that city to Cincinnati, having failed to keep its engagement, the former house saw itself on the verge of failure, and sent one of its partners to San Francisco to get as much gold dust as possible. Unfortunately for the Californians, the next steamer from Panama with the news of the St. Louis trouble was behind time, so that two steamers left San Francisco after the arrival of the
230
HISTORY OF SAN FRANCISCO.
partner and before the people knew that a disaster was coming. The result was that about one million dollars more had been carried away than would have been if the merchants and bankers had had the usual warning, and the lack of that sum was probably the main cause of the completeness of the crash that smote San Francisco on the twenty-third February.
On the day when the run began on Page, Bacon & Co., it became evident to Adams & Co.'s bank that they would have to close the next day, and that the attachments issued after the closing would not only be a source of ruinous expense, but would give such assets as might be saved from the ruin to a few cred- itors, leaving the others to lose everything. The house owed perhaps two million dollars to depositors-mostly poor men, there were no savings banks then-and the alarm was so great and general that it would all be demanded the next day, though there was not cash on hand to pay one tenth of it. A large portion of the capital was in fire-proof brick buildings, which had de- creased much in value with the decline of the mining towns, and yet would pay a good profit on the invest- ment if the express business could be continued, as the resident partners hoped it would be.
To preserve the popularity and good-will of the ex- press department, if possible, the resident partners con- sidered it important to secure a ratable distribution of the assets of the bank among the creditors. There was then no federal bankrupt act, and the state law gave the property to the attaching creditors according to the date
231
THE GOLDEN ERA IN DECLINE.
of their levies; so the first might get paid in full, while those later got nothing. To avoid the injustice of the attachment law, if possible, it was considered advisable to obtain the appointment of a receiver, who should act as trustee for all the creditors and pay his fair share to each. An amicable suit was therefore commenced in the name of Adams against the other partners, and under this proceeding, A. A. Cohen was appointed assignee, with instructions to take charge of all the property.
The popular excitement was intense throughout the state, the number of losers being great in the interior, as well as in the metropolis. The officers of the law in various towns refused to recognize the receiver, seized the assets within their reach, and distributed them to the resident creditors, paying in many cases not only the principal debt, but considerable sums for legal expenses, arising from attachment suits. In one town the bank was broken open by a mob and the money and dust in the vault were paid out by a committee of citizens to persons producing certificates of deposit, or claims backed by writs of attachment. It was soon evident that neither the banking nor express business could ever be revived. Much of the property had been taken illegally, but the costs of recovering it would far exceed its value.
On the night of his appointment as receiver, Mr. Cohen, acting with the advice of his counsel, moved the cash in the vault, for fear of a mob, from the house of Adams & Co. to that of Alsop & Co., bankers. The receivership having been declared illegal, under the state insolvent law, the creditors held a meeting and
232
HISTORY OF SAN FRANCISCO.
elected A. A. Cohen, Richard Roman, formerly state treasurer, and Jones, of the firm of Palmer, Cook & Co., assignees, and by them the assets were transferred from the house of Alsop & Co. to that of Palmer, Cook & Co. Cohen, having obtained permission to leave the state for three months, went to New York, and while there, Naglee, who had been appointed receiver, demanded from Roman and Jones the possession of the assets; but in the mean- time garnishments had been served by creditors on Pal- mer, Cook & Co., and the assignees pleaded inability to get the funds from the bank. The same demand was made on Cohen, as one of the assignees, when he re- turned, and he responded with the same plea. In a suit by Naglee against Cohen, before Judge Hager, judgment was rendered for two hundred and sixty-nine thousand dollars, and he was imprisoned for contempt when he did not pay. Meantime, the vigilance committee broke out; Heydenfeldt, one of the three justices of the supreme court, left the state; Terry, another, was imprisoned by the committee; Murray, the third justice, could not hold court alone, and no other tribunal could release Cohen. He was held in durance for six months, but when his case was heard he was released on his plea that it was an impossibility to get the assets from Palmer, Cook & Co.
The law provided that a bank could not be discharged under the insolvent law, and this principle had the corol- lary that the assets of a bank could not be distributed equitably among the creditors, so the assets of Adams & Co. became the subject of a general scramble by creditors
233
THE GOLDEN ERA IN DECLINE.
and lawyers, and reams of paper were required to con- tain the legal records of the proceedings. Most of the creditors got a trifle; some got payment three or five times over; others, after partial collections, sold their certificates to others, who collected again. Men who got hold of property of Adams & Co. bought up claims, em- ployed agents to garnishee them, and otherwise managed to keep what they had. The litigation continued for seven years, and most of the property was eaten up by the litigation, or disposed of so that no judicial decree showed what had become of it. A storm of obloquy for years followed the manager and the first receiver. The poor depositors, who would have got most of the money in the bank if the doors had not closed for the purpose of giving the money to a receiver, obtained nothing, and they and the press generally denounced the proceedings as a de- liberate fraud, but the accusation was never made the subject of trial in a criminal suit.
SEC. 111. Panama Railroad. The first railroad train crossed the isthmus of Panama, from ocean to ocean, on the twenty-third of January. Work had been commenced in 1850 with the expectation that the road would be finished within a year or two, at a cost of not more than one million and a half dollars. It was only forty-eight miles long; its highest eleva- tion was three hundred feet above the sea; for a con- siderable distance it ran over ground nearly level; it had neither long tunnels, deep rock cuttings, nor any great river to cross; and the right of way cost little. It had none of the difficulties that make railroads ex-
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.